In any given jurisdiction, there is a threshold question of whether applicable state or local law permits the acceptance of unsolicited proposals. A particular jurisdiction may have a general procurement code, which allows, prohibits, or is silent on unsolicited proposals, or it may have enacted special legislation that permits unsolicited proposals in connection with particular projects, public agencies, or other circumstances.
In the event a particular jurisdiction allows unsolicited proposals, it should have regulations or internal guidelines that dictate how the agency will handle the unsolicited proposal and any competing proposals that may be allowed. From a fairness and transparency perspective, it is unlikely that a jurisdiction would accept an unsolicited proposal without allowing other entities to propose alternative approaches or submit competing bids. Therefore, most jurisdictions that accept unsolicited proposals have a detailed process in place that specifies how the unsolicited proposal is reviewed, when competing proposals will be accepted and reviewed, and how a final determination will be made. In addition, to encourage private-sector innovation, many jurisdictions (including Delaware192 and Indiana193) have a statutory mechanism for maintaining the confidentiality of any proprietary information set forth in an unsolicited proposal and for compensating the initial proposer for concepts, technical solutions, or other work product that the public sponsor wants to use even if the initial proposer does not win the competitive bid process.
The receipt of an unsolicited proposal is likely to impose substantial costs on the public agency as it reviews the proposal and establishes a procurement process to solicit and evaluate competing proposals. Thus, some jurisdictions have imposed "proposal review fees" in order to defray the costs incurred in reviewing unsolicited proposals. The amount of any such fee must be established at a level that will not discourage private-sector entities from submitting unsolicited proposals. Public-sector agencies generally do not reimburse bidders for the costs incurred in developing their proposals, and the imposition of a substantial extra fee on top of such costs may drive private-sector companies away from making unsolicited proposals.
The USDOT Model Legislation explicitly provides for the receipt, evaluation, and acceptance of unsolicited proposals. The sample statute generally provides the following framework for dealing with unsolicited proposals. Within a specified number of days after receipt, the public agency must make a threshold determination whether the unsolicited proposal benefits the public and contains sufficient detail for the agency to evaluate it in an objective and timely manner. If the unsolicited proposal meets this threshold requirement, the public agency must advertise the proposal in a general manner in order to solicit competing proposals for the same proposed transportation facility. Upon receipt of any competing proposals that are comparable in scope, the public agency may select the initial or any competing proposal based on the standard criteria it is authorized to use in any PPP procurement. The model legislation provides that a public agency may charge a reasonable fee to cover its costs of reviewing the unsolicited proposal and any competing proposals.
Many states authorize the acceptance of both solicited and unsolicited proposals. The Virginia PPTA,194 as amended, contains detailed guidelines on the treatment of unsolicited proposals and is a good starting point for public entities looking to implement such procedures. The PPTA outlines a detailed six-phase process pursuant to which a private entity's unsolicited proposal moves from an independent review panel to an oversight board to the negotiating table. The process ensures that the proposed project satisfies a public need and that the private group is capable of completing the project at the proposed budget and in a suitable time frame. VDOT's Innovative Project Delivery Division estimates that an unsolicited proposal can move from initial submission to a comprehensive agreement in 10 to 18 months.195 Virginia, like some other states, authorizes the imposition of application fees to offset proposal review costs in certain circumstances.
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192 Del. Code § 2003.
193 Ind. Code Ann. § 8-15.5-4-6.
194 See generally Commonwealth of Virginia, Dep't of Transp., Innovative Project Delivery Division, Memorandum on Objective Criteria and Guidance for Selection of Candidate Public-Private Partnership Act Projects, No. IPD 06-01.0, Apr. 26, 2006.
195 Id.